A Month After Pledging $500K to Montana State University Billings Science Building, Montana Coal Board May Take It Back

By Tom Lutey

February 10, 2018 - Less than a month after pledging $500,000 for a new science building at Montana State University Billings, the Montana Coal Board is considering pulling the offer.

Coal Board officials notified Montana State University Billings this week that the $500,000 impact grant awarded to the University in January shouldn’t have been made. The board had overlooked a law defining which state agencies were eligible for coal grant help. MSUB doesn’t fit the bill.

“They’re not performing an eligible service as a state agency. So they shouldn’t have been awarded this grant,” said Amy Barnes, Coal Board attorney. “My recommendation is that the Coal Board act as soon as possible and withdraw this grant from MSUB.”

The Coal Board’s move comes at a bad time for MSUB, which is leveraging funding from other outside sources to reach its science building goal of $5 million. MSUB Foundation President Bill Kennedy and others told the Coal Board on Friday that a half-million-dollar retreat in funding could discourage other investors.

“We’re getting real close to having this funded and having the plans drawn up,” Kennedy said. “We are getting very close on this project.”

A display board shows the planned Montana State University Billings science building.

Photo by Larry Mayer, Gazette Staff

The Coal Board issues coal-tax-funded grants to help local governments deal with the effects of the coal industry on local communities, both as the industry grows or declines. The grant money is given to the board by the Montana Legislature.

State agencies that qualify for grants are either seeking to help local governments deal with the impacts of the coal industry, or are providing a direct service to the Coal Board.

What MSUB needed to be grant-worthy was that relationship with a local government. Word that the Coal Board would meet Friday to pull its grant offer sparked a frenzy at MSUB, where it was decided that the local government partner that the university needed was Big Sky Economic Development, a major collaborator in regional economic development projects, including the MSUB science building.

Had MSUB realized it needed a local government partner at the table, it would have included BSED from the beginning of its application, Kennedy said. But the Coal Board never indicated anything was wrong with the university's application, at least not until Monday, 25 days after awarding $500,000 to the project.

There were Coal Board members furious that the grant process for MSUB played out for months without a word from board staff that something may be wrong. The Coal Board is staffed by the Montana Department of Commerce.

“We went through this process three or four times, then why weren’t we notified by you as our legal counsel?” said Sidney Fitzpatrick, Coal Board vice chairman from Hardin. “This was for education, and I’m for education.”

Fitzpatrick said the last-minute decision for the Friday meeting, along with miscommunication from the Coal Board staff, gave him heartburn.

The important issue, said Jon Williams, Coal Board chairman and mayor of Colstrip, was rescinding the grant to MSUB. The Coal Board considered rescinding the grant but failed to get the votes.

The original Coal Board members who voted to award the money to MSUB suggested replacing the university with BSED as the grant applicant and not starting the grant process over.

In the end, Williams proposed both rescinding the award to MSUB and awarding the grant to Big Sky Economic Development. The Coal Board voted to forward the issue to its March 22 meeting in Billings. The chairman was opposed to awarding MSUB the money in the first place.

The MSUB project, known as the Yellowstone Science and Allied Health Building, is being led by the MSUB Foundation. The organization has now raised $3.5 million of the $5 million needed to begin construction.

The science building project has been on the Foundation's plate since 2013, when the Montana Legislature promised $10 million toward construction. The money requires a match of $5 million from MSUB.

The construction would add 50,000 square feet to MSUB's dated building that houses the Department of Biological and Physical Sciences. Space in the current building has increasingly become multi-use over the years, and as MSUB looks to bolster its science and health offerings, administrators want more space to do so.

MSUB said earlier that 11 percent of its graduates work in the industry and that more than 15,000 grads work in Eastern Montana counties, whose economies are tied to coal.

At the end of the Friday meeting, Big Sky Economic Development officials asked the Coal Board to confirm the issues with $500,000 grant were being worked out. Marketing Director Melanie Schwarz said she wanted to convey that assurance to would-be donors over the next month.